IndusInd Bank gets promoter backing amid financial recovery
The assurance comes as the bank, which operates a representative office in Dubai catering to non-resident Indian (NRI) services, navigates a challenging period marked by a significant financial misstatement.
Ashok P. Hinduja, chairman of IIHL, expressed unwavering support for the bank's leadership, stating, 'I have unequivocal trust in the chairman and board of directors for their swift and appropriate actions to address discrepancies and related concerns.' This commitment underscores IIHL's long-standing role as a steadfast supporter of IndusInd Bank over the past three decades.
The IIHL, with significant shareholding from UAE-based residents, is backed by the Hinduja Group, a 110-year-old multinational conglomerate, with multiple business interest in the UAE and the Middle East. The group has topped the Sunday Times UK Rich List at £35.3 billion for the fourth successive year in 2025.
In the UAE, the group has diversified business interests ranging from petrochemicals, and finance to bus/truck manufacturing. In Ras Al Khaimah, the group's Ashok Leyland operates a commercial vehicle assembling facility.
The lender reported a profit of $309.5 million for the fiscal year 2025, a sharp 70 per cent decline from the previous year's $1.07 billion, primarily due to a $235 million hit from accounting irregularities in derivative transactions.
On March 10, 2025, the bank disclosed the misstatement, which impacted 2.35 per cent of its net worth, equivalent to approximately Rs15.77 billion. The announcement triggered a 27 per cent plunge in the bank's stock price on March 11, erasing nearly Rs200 billion in market capitalization and leading to its inclusion in the Futures & Options (F&O) ban list.
Despite the setback, the Reserve Bank of India (RBI) intervened to reassure stakeholders, affirming that IndusInd Bank remains 'well-capitalised' with a 'satisfactory' financial position. The RBI directed the bank's board to implement corrective measures, prompting a partial recovery in share prices. Data from the bank's latest financial disclosures indicate a capital adequacy ratio well above regulatory requirements, providing a buffer for operational stability.
IIHL, which has 600 globally dispersed high-net-worth individual (HNWI) among its stakeholders, is poised for ambitious growth. The promoter aims to expand its Banking and Financial Services (BFSI) business to a $50 billion valuation by 2030 through strategic acquisitions in India, Europe, and the Middle East. This follows IIHL's recent $1.17 billion acquisition of Reliance Capital in India, signaling its intent to bolster its financial services portfolio.
Hinduja emphasised IIHL's readiness to inject additional equity if needed for business expansion, stating, 'Though the bank's capital adequacy is healthy, we remain committed to supporting IndusInd Bank's growth.' He highlighted the board's remedial actions, which are expected to enhance transparency and governance, rebuilding stakeholder trust. 'The coordinated efforts of management, under the board's guidance, have ensured robust business health and sustained customer confidence,' Hinduja added.
The RBI's orderly approach to addressing the issue has been praised, with Hinduja noting its history of providing effective guidance to the banking sector. As IndusInd Bank implements corrective measures, the promoter's backing and the regulator's oversight signal a path toward recovery. Hinduja described the situation as 'a new dawn with a sanitised slate,' positioning the bank to reclaim its longstanding reputation for reliability and trust in the financial sector.
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